Business Buzz Blog

Archive for August, 2010

The stumbling Euro, and the financial crisis in Greece has made the investors across the globe jittery and there have been protests against the government’s austerity programs and the protestors are now on the streets.

No one, even in his wildest imagination, must have foreseen what is happening in Greece today. Certainly not, when Greece pledged a financial overhaul, as it was eager to join the European Union, then called Euro zone. In more ways than one, this surely is a great Greek tragedy, whose cause can be traced to age old tradition of profligacy and over spending. Then there were the leaders of Greece who wanted integration of Greece into the European Union at any cost. Many say that this desire has spelt doom for Greece, and it is paying the price now.

Some say that the integration of Greece into EU before many other countries, who were richer and financially more disciplined, like Austria, Finland, Sweden, Spain and Portugal was very surprising indeed. Countries like France and Germany opposed the move at that time as they felt that Greece was just not ready for the integration. But those who were in favor of the move finally won, and their argument was that integration of Greece was the best possible means to modernize the fledgling democracy.

The then foreign minister of Greece, who fought hard for the integration of Greece into EU, Mr. Papantoniou now laments his zeal. He said, “ Now we are paying the price for the fact that we lived above our means, with amazing profligacy, and failed to reduce the role of the state.”

As the 16 member EU now prepares to chalk out strategy to bail out Greece from its financial mess, many are wishing that had Mr. Papantoniou lost his bet then, situation would have not been so grim as it is today.

During the first decade of its membership in the EU, no one foresaw anything wrong with its economic policies, and some even hailed Greece which was enjoying a 3% growth in GDP and also kept inflation under check.

Greek leaders of that time now recall that joining EU was a proud moment and it gave Greece a chance to be transformed from a third world country into one that wished to be as developed as Switzerland.

It was Germany, which sensed the problem with Greece first, and announced a series of tough measures for the members to remain in the EU.

Car makers across the country are unanimous that raising of ethanol blending in the fuel should be delayed until further testing of the vehicles. Currently, 10% Ethanola is mixed in the automotive fuel to allow more use of this bio fuel. Now the government is proposing to increase this to 15%, which the car makers are opposing. They are justifying their demand by giving data they have collected by testing the cars on 15% ethanol mixture. They say that half of the cars run on 15% mixture developed troubles, and the car engines became too hot.

Environmental Protection agency has been suggesting an increase in ethanol since last year. Ethanol industry is in favor of the new ruling as it says it will lessen the burden of importing oil from foreign countries. They say that the cars will have no problem in running on 15% ethanol mixture and this is just a ploy by the car manufacturers to hold on to their market share. Bob Dinneen, who is the president of the renewable fuels association, says that enough experimental runs have been conducted so far and they suggest that the cars run fine on 15% ethanol mixture as well.

Ethanol lobby is insisting on implementing the provision as the production of Ethanol has been increasing steadily and they want it all to be consumed in cars. Since there is disagreement between all three parties, representatives from all three will hold discussions in Washington on Wednesday to find a way out. Given the stance of the three, it is very unlikely that a consensus is going to emerge.

Oil companies, car makers and the ethanol producers are conducting tests in a joint fashion to see the effects of a 15% ethanol mixture on car engines.

General Motors spokesperson, on behalf of the grand alliance of the automobile manufacturers said that half of the engines that were tested on 15% ethanol mixture developed some kind of problem. According to him, more ethanol sends confusing signals to the car exhaust systems of the cars and thus car engines become too hot. This alliance wants the government to wait until 2011, until more testing is completed to see the effects of a 15% ethanol mixture on the cars.

Modern cars have an exhaust system that senses the fuel for oxygen. If more ethanol is added, it gets confused with the leaner fuel, as ethanol molecule contains one more oxygen atom, thus making the car engines too hot.

Recent activities of Apple have attracted the attention of antitrust enforcers who are planning to go ahead and see if the business tactics adopted by Apple are restrictive or not. It is the licensing agreement Apple has made with its application developers that is the centre of attraction, and there is a clause which forbids the developers from using software tools of their own. Instead they are being asked to develop apps by using the software being supplied by Apple.

Adobe Systems Inc. is one of the software companies whose software cannot be used by the developers, and it has raised the issue with Apple. Apple’s smart phone has become a very powerful tool in mobile devices for computing and after PC’s; it is fast becoming the second choice of the masses.

Another activity, which has brought Apple under scanner, is its policy of forbidding apps from transmitting analytical data. This implies that ad networks would be prevented from placing ads, and this puts Apple’s new iAD mobile advertising service in an advantageous position.

Apple’s popularity is on the up, and the sale of iPAD has increased many times in the recent times. More than 85 million iPhones have been sold by Apple so far, and its spokesman said that Apple has sold more than a million iPads, the multimedia tablet PC’s, which were launched last month by the company.

Some critics, who are observing the situation closely, are of the view that Apple is engaging in those very practices which it once criticized when they were adopted by Microsoft in the 1990’s.

Justice department, and the antitrust enforcers are talking to each other on how to proceed and which agency should initiate the proceedings. The grounds of investigation are still unclear. May be the agencies and the regulators are busy documenting evidence against the company. Recently an executive of a wireless company confirmed that he was approached by an official of FTC who wished to be apprised of the procedures in the mobile ad industry and how it works. All this merely indicates that the investigators are preparing the ground for the action to be initiated against Apple.

Insiders say that Apple could try to circumvent the antitrust enforcers by changing the terms of agreement with the app developers. Some app developers say that it will be difficult for Apple to enforce the provisions about not transmitting iPhone data.